ROAS is a word that Google advertisers are familiar with; it stands for Exchange On Ad Spend, or what you get in return for what you spend on advertising. Also, the POAS aim (Profit On Ad Spend) is now in play. The POAS is also the profit, or better yet, the gross margin per ad divided by the cost of advertising. Some argue that it provides a significantly more accurate view of your campaign’s profitability.
In the ever-evolving world of digital marketing, all it takes is a split second for people to switch from one platform or strategy to another. And those who do not follow the present become a thing of the past and this is the reason why advertisers need a basis for analysis that can help them perform better. The focus of online marketers is gradually changing from ROAS to POAS. Today, some marketers consider POAS to be a more accurate indicator of your PPC campaign’s profitability and conversion rates than ROAS. Online advertising is rapidly changing, and some marketers now consider POAS marketing to be a more accurate indicator of the profitability and conversion rates of your PPC campaign than ROAS.
ROAS and it’s working.
Return on Ad Spend (ROAS) is a revenue-based marketing metric for online advertisers that measures the effectiveness of a digital advertising campaign. ROAS assists an internet business in determining which approaches are effective and how to optimize future advertising efforts.
Target ROAS allows you to bid based on the desired return on ad spend (ROAS). This clever bidding approach allows you to increase conversion value or revenue while maintaining your target return on ad spend. At auction time, your bids are automatically optimized, allowing you to customize bids for each auction. Available as a single-campaign basic strategy or as a portfolio strategy for many campaigns.
POAS and it’s working.
Simply expressed, the gross profit attributable to the internet marketing channel when ad spends is taken into account. The emphasis on POAS ensures that you will make better decisions that will improve the profitability of your campaigns. You avoid discontinuing the wrong efforts or investing in campaigns that appear profitable at first glance but are not.
You can easily decide if POAS is the answer for you. For each advertisement, can you easily calculate the amount earned? Are you able to calculate the margin based on the conversion value at each level if the margin is the same for each product?
Both these strategies have their own advantages and to come to a concrete answer on which is better of the two completely depends on the business and the campaign. It pays to invest some time and figure out the one that has the potential to work best for you. It’s possible that someone visits your website after seeing an advertisement for a specific product and then purchases a different product with a different margin than the one you advertised. That is why the term “margin per advertisement” is used, and you are likely to come across it every now and then.